Special to the NNPA from the Global Information Network
(GIN) – A multinational mining group with projects in Mozambique and Guinea is hemorrhaging cash in West Africa and could even lose its largest investment.
Rio Tinto, under investor pressure to cut costs, has been pressuring the government of Guinea to pick up half the tab for a 400 mile railway. 35 bridges and a four-berth wharf offshore – total cost about $10 billion – but Pres. Alpha Conde says it’s a no-go. “How could a poor west African nation that has recently received debt relief take on obligations of $5 billion – equivalent to Guinea’s annual gross domestic product…?” analysts told The Financial Times newspaper.
Work at the Simandou project may have already been frozen, despite public denials by Sam Walsh, Rio’s new CEO. At a recent meeting with Pres. Conde, Walsh reportedly threatened to cut the Rio Tinto budget by $600 million and cut its staff in Guinea to five people.
But Guinea may have an escape clause. According to its contract with Rio, Guinea may start “termination proceedings” if production fails to begin by 2015.
Similarly in Mozambique, Rio Tinto is finding an unexpected obstacle in the person of Zoria Macajo, the matriarch of Capanga, a small village above the Zambezi River which sits atop one of the world’s largest untapped coal reserves and stands in the way of company expansion.
The 59 year old leader is refusing eviction orders until her people are paid adequately for their land. “Our people have rights. The company promised it would compensate us.”
Rio’s offer of houses and land in a new resettlement area, some 25 miles away, is unappealing. Far from the main road and from jobs, residents call the company-provided homes “ruins, not houses”.
Rio Tinto also has a U.S. presence. In the Salt Lake Valley since 1989, they are the parent company to Kennecott Utah Copper, Kennecott Land Company, Kennecott Exploration and eight support functions totaling more than 2,400 Utah employees.
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